Govt exempts public sector companies from minimum public float rules

Tags: National Economy/Finance

The government of India has exempted public sector entities from the Minimum Public Shareholding (MPS) norm which mandates at least 25 per cent public float for all listed companies.

The Securities Contracts (Regulation) Amendment Rules, 2022 was notified by the government on 2 January 2023. 

According to the notification “any listed entity in which the Central Government or State Government or public sector company, either individually or in any combination with others, holds directly or indirectly, majority of the shares or voting rights or control of such listed entity, are exempted from any or all of the provisions of this rule”. 

Rule 19 A of the Securities Contracts (Regulation) Rules prescribes that a listed entity must have at least 25 percent of public shareholding. Public shareholding means an investor who is not the promoter of the company. The investor could be either an individual or an institution.

Listed Company means that the capital instrument of the company (shares, debenture or bonds etc) is listed on any stock exchange and it can be bought and sold in the market.